AP Macro Econ Unit 5 Voc Quiz

the difference between tax revenue and government spending

• budget balance

• Budget deficit

• Budget surplus

• Deficit spending

monetary policy that reduces aggregate demand

• contractionary monetary policy

• monetary neutrality

• quantity theory of money

• velocity of money

the negative short-run relationship between the unemployment rate and the inflation rate

• Short-Run Phillips Curve (SRPC)

• aggregate production function

• Long Run Phillips Curve

• Crowding out

(M x V = P x Y)

• quantity theory of money

• the idea that changes in the money supply

• relationship between the unemployment rate and the inflation rate

• velocity of money

the ratio of nominal GDP to the money supply; it is a measure of the number of times the average dollar bill is spent per year

• velocity of money

• improvement in labor

• labor productivity

• Non-accelerating inflation rate of unemployment

a hypothetical function that shows how productivity depends on the quantities of physical capital per worker and human capital per worker as well as the state of technology

• aggregate production

• Long Run Phillips Curve

• Disinflation

• monetary neutrality

government policies that seek to promote economic growth by affecting short-run and long-run aggregate supply

• supply-side fiscal policies

• aggregate production function

• contractionary monetary policy

• budget balance

natural rate hypothesis

• the claim that unemployment eventually returns to its normal, or natural, rate, regardless of the rate of inflation

• the improvement in labor created by the education and knowledge of members of the workforce

• output per worker; also referred to as simply productivity; increases in labor productivity are the only source of long-run economic growth.

• the unemployment rate at which inflation does not change over time

Long Run Phillips Curve

• shows the relationship between unemployment and inflation after expectations of inflation have had time to adjust to experience

• a hypothetical situation that shows how productivity (output per worker) depends on the quantities of physical capital per worker and human capital per worker as well as the state of technology

• the unemployment rate at which inflation does not change over time

• the negative short-run relationship between the unemployment rate and the inflation rate

Disinflation

• a reduction in the rate of inflation

• Inflation exceeding 50% per month

• the difference between tax revenue and government spending

• emphasizes the positive relationship between the price level and the money supply